Carter Worth And Mike Khouw's Home Depot Trade

Carter Worth analyzed on CNBC's Options Action Home Depot Inc HD from a technical standpoint. He compared its price performance and profitability with the performance and profitability of the S&P 500 and he concluded Home Depot has a similar return to the S&P 500, despite having significantly better profitability. He also identified the bottom head and shoulders pattern on Home Depot's chart and he thinks the stock might break out to the upside after the earnings report, scheduled for Tuesday. Worth would initiate a long position in the name ahead of earnings.

Mike Khouw thinks the best way to get long is by purchasing the April 145 call for $2. The trade breaks even at $147 or 2.8 percent above the closing price on Friday. He explained that the earnings results could disappoint and that's why he wants to limit risk with a call option.